Release time : 2015-06-15 11:59:46
Continental AG, Europes second- biggest car-parts maker, said it aims to merge with controlling shareholder Schaeffler Group in the medium term in a way that will assure an investment-grade debt rating.
The companies havent decided on the timing of any combination, or on the merged entitys financial structure, Hanover, Germany-based Continental said in a stock-sale filing.
Schaeffler, which makes ball bearings for the automotive and aerospace industries, controls about 90 percent of Continental after a debt-financed takeover bid in 2008. The companies have been in talks since then concerning a potential merger. Continentals debt is rated B+ at Standard & Poors and Fitch Ratings, four levels below investment grade.
Continentals supervisory board agreed on Jan. 6 to a 1.1 billion-euro ($1.6 billion) share sale to help refinance 9.5 billion euros of debt stemming from its purchase of Siemens AGs VDO car-parts unit in 2007. The company agreed with banks in December on a 2.5 billion-euro credit line maturing in 2012. Herzogenaurach, Germany-based Schaeffler separately has 12 billion euros of debt from buying Continental.
Continental also said it wont pay a dividend on its shares for 2009 and that it isnt likely to pay a dividend for 2010. It said it may not be able to pay a dividend until August 2012.